Low-income households

Inflation is hitting the poorest families up to a third harder than the richest ones, due to the soaring cost of essentials such as gas and food, says the charity Barnardo's in a new report. Its conclusions are based on interviews with low-income families and new analysis of economic data.

2.4 million low-income families will pay on average £138 a year more in council tax from 1 April 2013, says a new analysis from the Joseph Rowntree Foundation. This is a result of the coalition's replacement of council tax benefit (CTB) in England with localised systems of council tax support (CTS), along with a 10 per cent cut in funding.

Low-income families in England will see their council tax bills rise by up to £600 a year from April 2013 as a result of council tax benefit 'reform', according to a think-tank analysis.
From April 2013 the government is handing responsibility for council tax support to English local authorities, at the same time as imposing a 10 per cent cut in funding for it. It is insisting that pensioners are fully protected from any rises under the new localised system, with the result that the changes will hit working-age households disproportionately. The Resolution Foundation study incorporates details of the reported intentions of 184 of England’s 326 local authorities.
Key points

Almost a quarter of households in England and Wales suffered from water poverty in 2009/10 and if water charges continue to rise more quickly than inflation, the extent of water poverty could more than double by 2033. This is causing problems both for low-income families, who find that water costs are putting ever more pressure on household finances, and for the water companies, who face increasing losses of revenue through non-payment.

Since water privatisation in 1989, water prices have been increasing faster than both inflation and average earnings. As the graph below shows water and related charges have risen faster than overall consumer prices (though less than fuel and lighting). This has posed particular problems for families on benefits as benefit increases have been pegged to the Consumer Prices Index.

The poorest UK households are being disproportionately hit by the impact of soaring food prices, according to a new government report containing more detailed statistics than previously available on income groups. It also shows that the consumption of every major nutrient has fallen in the last four years since world food prices began to rise.

The links between poverty and job insecurity are highlighted in an annual monitoring report from the Joseph Rowntree Foundation. It estimates that 6.1 million people in working households are now living in poverty – a number that exceeds the 5.1 million people in workless households in poverty.

Not all low-earning working households will be better off under the new universal credit system, according to a report from the Chartered Institute of Housing. It calculates that 400,000 working families will have less income under universal credit in 2015 than they did in 2010.

Workers in the US have not benefited from earnings growth for an entire generation – the average American worker earned no more in 2009 than in 1975 – and now something similar appears to be happening to the 'squeezed middle' in Britain. A new book, to be published shortly, brings together a wide range of expert contributions on the lessons the UK can learn from the American experience.

Millions of households are heading for a long period of falling or stagnant living standards unless bold steps are taken to ensure economic growth over the next decade is broadly shared, according to a commission report. It warns that even with a return to steady growth, living standards for many low-to-middle income households are likely to be lower by 2020 than they were in 2008.

The commission consisted of a broad group of leading economists, employers, trade unionists and heads of parents’ groups brought together by the Resolution Foundation think tank.

As many as one in five workers – some 4.82 million people – are paid less than a 'living wage', according to a new analysis.

The study is published by a leading accountancy firm that supports the living wage for its own employees.

A living wage was calculated to be £8.30 an hour in London in 2011 (£7.20 outside), based on what was needed by the average household type to cover basic living costs. This compares with the current statutory minimum wage of £6.08. An uprated living wage calculation for 2012 is expected to be published soon.

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PSE:UK is a major collaboration between the University of Bristol, Heriot-Watt University, The Open University, Queen's University Belfast, University of Glasgow and the University of York working with the National Centre for Social Research and the Northern Ireland Statistics and Research Agency. ESRC Grant RES-060-25-0052.